MOSCOW—Russian carrier Mobile TeleSystems (MTS) placed its first euro bonds worth US$250 million as it needs additional funds for regional expansion.
MTS spokeswoman Eva Prokofyeva said the funds will be used “for a further network development, including in the regions.”
The yield of the three-year bonds comprised 11.25 percent annual on placement, and coupon payments will be made twice a year at a 10.95-percent rate. The bonds mature on 21 December, 2004.
It was the first attempt by MTS to borrow money on the international debt market. Moody’s international rating agency rated the carrier as Ba3.
MTS announced its euro bonds plans in November, and mobile market experts linked the placement haste to the reported purchase of a controlling interest in Russia’s fourth-biggest regional carrier Kuban GSM in the south of Russia and possibly of SMARTS on the Volga. The Kuban GSM deal is estimated at more than US$70 million.
MTS’ major competitor Vimpelcom (BeeLine) also plans to issue euro bonds in the first half of 2002.
“Both MTS and Vimpelcom have enough funds to build new networks in licensed areas in a short-term perspective. However, they need additional finances to purchase regional carriers,” said Anton Pogrebinsky from J’Son & Partners telecom consultancy in Moscow.
The third-biggest carrier, the pan-Russian Megafon project, plans no foreign borrowings next year.
